Chicago is key to a business moving tons of drugs for billions of dollars. Here’s how the whole operation works.

On the night that Jesús Vicente Zambada Niebla strode into the lobby of the Sheraton Maria Isabel Hotel in Mexico City, the price on his head was $5 million.

The handsome 33-year-old, nicknamed El Vicentillo (Pretty Boy Vicente), was a notorious drug capo. He was also the only son of Ismael “El Mayo” Zambada García, the No. 2 boss of Mexico’s powerful Sinaloa cartel, the biggest supplier of illegal narcotics to the United States. For years, the younger Zambada had been on the run from the federales as well as from U.S. authorities. But that night in March 2009, he strolled into the hotel for an unlikely midnight tryst with—of all people—two agents from the U.S. Drug Enforcement Administration.

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According to court documents, the meeting had been arranged by Humberto Loya Castro, a consigliere to the cartel (and, since 2005, a DEA informant). Zambada didn’t know it, but he was walking into a trap. His fate had been sealed eight months earlier, when two drug wholesalers from Chicago—the Flores twins, Margarito Jr. and Pedro—flipped on their Sinaloa employers. That led authorities on both sides of the border to make a series of arrests all the way up the cartel chain of command to Zambada.

Hours after Zambada left the hotel, just before daybreak, he and his entourage of five heavily armed bodyguards were loading their vehicles in the driveway of Zambada’s safe house in the leafy neighborhood of walled estates called Lomas de Pedregal. Sixty regulars from the Mexican special forces surrounded them. Caught off-guard and outnumbered, the men surrendered their arsenal of AR-15 semiautomatic rifles and .38 Super pistols. Pretty Boy Vicente was taken into custody without firing a shot.

Never heard of the Sinaloa cartel? If you’re in law enforcement, you certainly can’t say the same. Last February, the Chicago Crime Commission branded Sinaloa’s leader, the elusive and fearsome Joaquín “El Chapo” Guzmán Loera, Public Enemy No. 1—a distinction last held by Al Capone.

“What Al Capone was to beer and whiskey, Guzmán is to narcotics,” Art Bilek, the commission’s executive vice president, said at the time. Except, Bilek added, Guzmán “is clearly more dangerous than Al Capone was at his height.” (Zambada is plenty dangerous, too: Prosecutors say he commanded logistics and security for the cartel, including assassinations. He is suspected in a number of slayings, including the murders of government officials.)

The cartel’s scope is staggering. About half of the estimated $65 billion worth of illegal cocaine, heroin, and other narcotics that Americans buy each year enters the United States via Mexico, according to law enforcement experts (though the drugs often originate in South or Central America). More than half of that is believed to be supplied by Sinaloa. Drug enforcement experts estimate, conservatively, that the cartel’s annual revenues exceed $3 billion: more than those of the Chicago Mercantile Exchange Group.

In Chicago, the cartel has a near monopoly. “I’d say 70 to 80 percent of the narcotics here are controlled by Sinaloa and Chapo Guzmán,” says Jack Riley, director of the DEA’s Chicago office. “Virtually all of our major investigations at some point lead back to other investigations tied to Sinaloa.”

In August 2009, five months after Zambada’s capture, a federal grand jury in Chicago indicted him and 45 others tied to a Sinaloa-led drug ring in the city. Patrick Fitzgerald, the U.S. attorney at the time, called the indictments “the most significant drug importation conspiracies ever charged in Chicago,” claiming that the cartel imported and distributed nearly $6 billion worth of illegal narcotics mostly to the Chicago area between 1990 and 2008.

The announcement was a big one, to be sure: Zambada would be the highest-ranking cartel leader ever to be prosecuted in the United States. But a major turning point in the war on drugs? Not exactly. More than four years later, Zambada—who currently resides in a federal prison in Milan, Michigan—still has not been tried, in part because of endless wrangling by prosecutors and defense attorneys on the size and scope of the pretrial legal discovery. At presstime, a status hearing was scheduled for September 25.

Whenever Zambada does get to the Dirksen U.S. Courthouse, all eyes in the narco world will be watching. In court filings, Zambada has already made the explosive claim that he was working as a secret informant for the DEA. In exchange for information on rival drug lords, he says, U.S. authorities offered him immunity from prosecution and turned a blind eye toward the Sinaloa cartel’s illegal activities. (Prosecutors deny these allegations.)

Whether or not Zambada’s statements prove true, the trial should provide a rare and enlightening window into the inner workings of the Sinaloa cartel’s massive drug distribution operations in the United States and its deep roots in Chicago. And if anything, experts say, those operations have only increased in the past four years. (Chicago constructed this story from thousands of pages of federal court records, police reports, and court testimony from related cases, as well as from official government reports and dozens of interviews with federal and local law enforcement officials and attorneys for some of the defendants; through a spokesman, prosecutors in the Zambada case declined comment.)

Sure, Zambada’s capture—and the dismantling of one of the Sinaloa cartel’s large Chicago-based drug distribution operations, run by the Flores twins—may have hurt business for a time. But the cartel’s two leaders, Guzmán and the elder Zambada, are still at large. And the illegal narcotics trade is remarkably resilient.

Indeed, today the Sinaloa cartel and its rivals are selling record amounts of heroin and methamphetamine in Chicago, according to drug seizure data and law enforcement officials (see “Sizing Up the Big Four,” below). In May, the regenerative powers of the cartel led Chicago’s police superintendent, Garry McCarthy, to call America’s war on drugs a “wholesale failure.”

The failure is as much Chicago’s as the nation’s. For this city has replaced Miami as the primary U.S. distribution point for illegal narcotics—mainly cocaine, heroin, marijuana, and methamphetamine—imported from Mexico.

In a 2010 report, the U.S. Department of Justice named the Chicago metro area the No. 1 destination in the United States for heroin shipments, No. 2 for marijuana and cocaine, and No. 5 for methamphetamine. Chicago is the only U.S. city to rank in the top five for all four major drug categories. No wonder Sinaloa boss Guzmán was quoted in a recent New York Times Magazine article calling Chicago his cartel’s “home port.”

The Cartel’s ‘Home Port’

Chicago is the only U.S. city to rank in the top five for all four major drug categories.

No.1 destination in the United States for heroin shipments

No. 2 for marijuana and cocaine

No. 5 for methamphetamine

SOURCE: U.S. DEPARTMENT OF JUSTICE

It might seem odd that a city some 1,500 miles north of the Mexican border has become the nation’s narcotics center. But there are four main reasons: transportation, ethnic makeup, size, and gang culture.

Chicago is the transportation hub of America, a fact not lost on the Mexican cartels (just as it wasn’t on Capone and his fellow bootleggers almost a century ago). It’s ideally located within a day’s drive of 70 percent of the nation’s population. Six interstate highways crisscross the region, connecting east and west. Only two states (Texas and California) have more interstate highway miles than Illinois.

As for rail transport, Chicago welcomes six of the seven major railroads and accounts for a quarter of the country’s rail traffic. Water? The Port of Chicago is one of the nation’s largest inland cargo ports, and the city is the world’s third-largest handler of shipping containers (after Singapore and Hong Kong). And let’s not forget about Midway and O’Hare: More than 86 million passengers and 1.5 million tons of cargo passed through these airports combined in 2011, the latest year for which data are available.

Second, the Chicago metro area has a large Hispanic immigrant population, making it easy for Mexican cartel operatives to blend in. (Only Los Angeles, San Antonio, and Houston have more residents of Mexican descent, according to the 2010 census.)

Because many of these immigrants—especially those who are here illegally—are poor or underemployed, the area provides a fertile recruiting ground for cartel operatives.

According to a Cook County law enforcement officer familiar with the local drug trade, the Pilsen and Little Village neighborhoods, which are more than 80 percent Hispanic, are el eje (the axis) of drug distribution in the city. They’re conveniently located near the Stevenson, Dan Ryan, and Eisenhower Expressways, Metra’s Burlington Northern Santa Fe line, and a major industrial corridor off Blue Island Avenue. (With 1.3 billion square feet of warehouse property, Chicago has one of the largest concentrations of industrial space in the nation, offering plenty of room for cartels to hide contraband.)

Third, the city is a huge market in its own right. Chicagoans’ taste for drugs is as big as—if not bigger than—that of most other Americans. For example, according to a report by the Office of National Drug Control Policy, 86 percent of people arrested in Cook County in 2012 tested positive for at least one illegal narcotic—the highest percentage of any big city. Twenty-two percent tested positive for more than one.

While the amount of cocaine seized annually by law enforcement officials in the Chicago area has been declining in recent years, the amount of heroin has skyrocketed, rising sixfold from 2002 to 2012. Chicago’s rate of heroin-related emergency room admissions is three times the national rate.

Methamphetamine sales are way up, too. As U.S. authorities have cracked down on home-produced meth, the cartels have been breaking badder: inundating Chicago and other U.S. cities with extremely pure, relatively cheap meth straight from “superlabs” in Mexico. In 2002, law enforcement officials in Chicago seized 3.5 kilograms (8 pounds) of meth; in 2012 they seized more than 70 kilos (155 pounds).

Finally, Chicago’s deeply entrenched street gangs offer a ready-made retail network. Law enforcement officials estimate the number of street gangs in the city at more than 70 and the number of members at between 70,000 and 125,000. The DEA’s Jack Riley likens them to “100,000 Amway salesmen” for cartel-supplied drugs.

“It’s easy for the cartel to get the drugs to Chicago and then have people put them on the street,” explains Christina Egan, the former deputy chief of the narcotics and gangs unit for the U.S. attorney’s office in Chicago. “There’s a huge demand, and with the gangs in Chicago, it’s easy to service that demand.”